1. Cost Containment Working Group Board Update
January 24, 2019

2. Main Drivers of Cost and Delay Unbalanced risks
Initiative announced in June 2018
Main Drivers of Cost and Delay
Unbalanced risks
Layers of bureaucracy and red tape
Weak project management
Goal: Deliver projects on time and on budget

3. June Recommendations 1. Rebalancing Risk 2. Red Tape
More design-build
3rd Party Dispute Resolution
Use incentives & penalties
Expand competition
2. Red Tape
Cut change order processing time
Cut submittal processing time
Simplify specifications
3. Project Management
Appoint project CEOs
Aggressively manage scope expansion
Better cost forecasting

4. Rebalancing risk – design-build contracts
More projects done as design-build
Bridges & Tunnels – seven D-B projects in 2018 for $251 million
Metro-North – four D-B projects kicked-off in 2018 worth $580 million; three more coming in 2019 worth over $130 million.
NYCT – 19 stations done with design-build under enhanced station initiative
LIRR – using D-B for 14 station enhancements & one traction power substation; 2 more substations in 2019

5. Rebalancing risk – contract dispute resolution
Using neutral third parties to resolve disputes, not MTA employees
MNR not using MTA employees as arbiters on all contracts
In 2019, all new construction contracts over $50 million will adopt independent / neutral third party model

6. Rebalancing risk – other contract reforms
Reducing financial risk
Bond requirements – Going forward, payment bonds will be cut in half on contracts exceeding $250 Million
Faster payments – reduce internal payment cycle to 21 days
Partial payments – even when some items are in dispute

7. Rebalancing risk – smarter risk allocation
Sharing risk drives lower bids
Track outage – MTA and contractors each responsible for own performance
Utilities – contractor not liable for delay caused by utilities
Hazardous materials – allocated contingency for unknown risks
Unexpected subsurface conditions – risk is shared

8. Cutting red tape – change order processing time
66% drop
192
562

9. Cutting red tape – NYCT process improvements
NYCT attacking red tape on many fronts
Rewriting 50+ design specifications
40% increase in track outage for capital projects
Streamlined cost forecasting – Sea Beach subway station
13% increase in NYCT work train locomotive availability
30% increase in flat car availability
Better management eliminating flagger shortages
New NYCT executive committee meets bi-weekly to resolve scope and schedule issues

10. Stronger project management – project CEO
Strong project leadership controls scope creep
Project Leads for projects over $50 million at B&T
MNR using Project Lead for $365 million Harmon Shop Phase 5 Stage 2
LIRR using Project Lead for Jamaica Capacity Improvements Phase I ($301 million, in construction) and Phase II (in design)
Agencies revising project management policies & job descriptions for project leads

11. MTA needs a culture change around capital projects
Incremental Progress
MTA needs a culture change around capital projects
Memo from the Chairman
Agencies asked to report by April 1
Make progress on multiple fronts

12. Additional cost issues to be addressed
Next steps
Additional cost issues to be addressed
Utilities – MTA only agency that pays utility relocation costs
Labor costs & work rules – MTA should have a seat at the table
Force account – internal labor (flaggers, design review, inspection, etc.) drives project costs
MWBE contracts – administer effectively to grow expertise and capacity to deliver
Project management – external consultant costs

13. Questions